How to Open a Restaurant

You have an entrepreneurial spirit. You dream of being your own boss. You are a passionate foodie who is also business savvy. You have always wanted to open your own restaurant.

According to Technomic, the United States Restaurant and Bar Industry annual sales forecast is predicted to reach $603 billion in 2019, a 3.6% growth increase from 2018. The market is booming, and now is the time to embark on your business venture and open the restaurant you’ve always dreamed of.

While opening a restaurant can be one of the most rewarding feats and accomplishments for a new business owner, the experience can also be challenging. Several important factors go into opening your first restaurant.

So… HOW do you actually go about doing it?

 

  1. Do your Homework.

First and foremost, as a restaurant operator, small business owner, or any food-service player, you will need to understand your target market, competitors, your target consumers, and their typical buying behaviors. Research local suppliers, vendors, and resources offered by your local community. Many colleges or career centers offer free counseling on opening a business. Meet with your local municipality to learn more about zoning laws, liquor licenses, coding, food safety regulations, and any permits you may need.

Understanding your market and local area will assist you in determining the location, size, construction, concept, and financial backing you’ll need.

Start off by reaching out and speaking to friends, family members, or contacts you may have who own their own business. Ask them to share their story with you about how they got started- the benefits, difficulties, the ups, the downs, all of it. There is nothing more valuable than firsthand insight and real-life experience from your trusted circle of influence.

 

  1. Choose a restaurant concept.

The restaurant industry is booming, and new trends and fads are opening left and right. How do restaurants distinguish themselves nowadays? What classifies one type of restaurant or eatery from another?

QSR, or Quick Service

Quick service restaurant concepts hold the top nine spots on the Technomic Top 250 Restaurant Report list for 2019. They are currently dominating the restaurant landscape.

Quick Service Restaurant (QSR) is the official restaurant terminology for a “fast food” establishment, with well-known names like Subway, McDonald’s, Burger King, KFC and Wendy’s being prime examples of this type of restaurant segment. Most QSR environments are centered around functionality, with speed and efficiency being primary goals.

  • Price point usually ranges from $5-$8 per meal.
  • Limited menus that usually consist of handheld sandwiches/burgers, wraps, and a limited selection of salads.
  • Offer plastic seating and tabletops, table service rarely provided.
  • Food is most often taken to-go.

 

Casual Dining, or Table Service

Casual Dining, or Table Service, is what most consumers would classify as your typical “sit-down restaurant.” Large chains such as Olive Garden, Red Lobster, TGI Friday’s, Chili’s and Applebee’s are amongst the most popular casual dining options in the restaurant industry. new year restaurant blog

  • Price point is $15-$17 per meal on average.
  • More extensive menu, with additional chicken, fish, beef, and vegetarian dishes to choose from.
  • Normally serve alcohol with a bar in-house.
  • Ambiance tends to be more “upscale” than a QSR or fast-casual location.
  • Offers more comfortable seating with booth and table options, paired with dimmer lighting.

 

Fast Casual

Fast-casual is a blending of fast food and casual dining and is currently taking the restaurant industry by storm. Customers expect the speed of a QSR but with higher quality ingredients, resulting in a fresher tasting meal.

According to Technavio, the market for fast-casual cuisine is projected to reach $66.87 billion by 2020. Names like Five Guy’s, Panera Bread, Moe’s, Quizno’s Subs and Chipotle top the charts as some of the biggest names in the industry.

  • Price point on average is $12 per meal.
  • Utilize locally sourced produce and other artisan ingredients.
  • Prepare food onsite in front of the guest.
  • Offer healthier options, including gluten-free and vegetarian dishes.
  • Usually does not offer table service – guests place their orders at the counter then wait in the “assembly” area.

POS Header - Burger

Regardless of which type of restaurant concept you choose to operate, be sure you are making an investment in a competitive concept, not a passing fad or a current trend that could potentially become obsolete or replaced with the “next big thing.”

We suggest creating and building a diverse menu, combining a variety of classical and new, trendy dishes.

 

  1. Create a Financial and Restaurant Business Plan

When determining what your restaurant will be, it is also important to decide what it is not. Start by making a list of things you don’t want to offer in your restaurant. This can assist you in narrowing down ideas and coming up with a successful concept that you are proud of. Come up with a business plan by answering the basic “who”, “what”, “when”, “where”, and “how” questions associated with your operation.

A good business plan has three main parts:

  • Executive summary (your restaurant’s overview, mission statement and brand identity).
  • Business description (concept, size, location, description, name).
  • Market analysis (competition, consumer buying behavior, financials).

If you’ve never created a business plan, browse online resources for some guidance. We’re a big fan of Hubspot’s “Startup Guide for Entrepreneurs” template.

One of the most significant benefits of creating a business plan is that it allows you to organize your idea and understand the steps to execute it. As a new restaurant owner, one of the main goals is also to convince investors, banks, and financial supporters to provide any capital you are requesting in the form of equity or a business line of credit.

In the restaurant industry, typically you do not see a profit for the first 6-9 months, or even in the first year at a minimum. Make sure part of your restaurant business plan is dedicated to your financial plan and budget. Be sure you have a way to cover rent, inventory, startup costs, training, and labor costs until you begin bringing in a steady stream of revenue as profit. Before you open your doors, set aside nine or more months of capital for operational costs.

Your business plan should also include what your operations will be. For example, how many employees will it take to staff your restaurant, catering business, or fine dining establishment accordingly? How many chefs will your kitchen require? Will you need servers? A hostess? Delivery driver? What is your management structure?

You will also want to loosely build your menu and identify where your inventory and supplies will come from on a regular basis.

 

  1. Select your Location

Your location has one job, and one job alone: to attract customers. If your storefront is not in a convenient, well-known, or trendy downtown location, customers will either struggle to find you or won’t be reoccurring visitors as much as you would like.Restaurant interior by Rod Long

Again, research your local area and determine the “hot spots” where consumers are visiting on a regular basis. Work with a local real estate agent to see what storefronts, buildings, or dining/banquet halls are for sale or for rent in your area, depending on what your intent is for your restaurant.

Once you’ve found the perfect location, it’s time to think about your restaurant’s design and style. What ambiance are you hoping to achieve? What is the goal of your dining experience? What is your brand’s color scheme or theme? It’s important to take this into consideration as you scout out your location as a first-time business owner so you can determine what construction is needed once your location is secured.

 

  1. Build your Menu

Your menu is more than simply offering “great food” to the public. Your menu is the one piece of advertising all your customers are guaranteed to see. Through that menu, you have the power to influence their decision making and buying behavior.

What do you want your menu items and food preparation to say about your brand? As the heart of your restaurant concept and identity, it’s important to create a menu you’re proud of, but also one consumers will be drawn to. Will you take a Farm to Table approach, and offer seasonal dishes inspired and sourced by local farmers’ markets? Maybe you’ll choose to focus on one type of dish at the center of your menu, like a pizzeria or a steakhouse. Whichever route you decide to take, consider the size, layout, and infrastructure of your kitchen to ensure the location can support your menu and food preparation needs.

Restaurant POS Menu board

 

  1. Purchase Equipment

Everything from convection ovens, soda machines, décor and employee uniforms to the tables and chairs in your dining room, point of sale technology, and cloud-based software needs to be budgeted, planned, and accounted for before opening your restaurant.

How many coolers do you need to store your inventory? Will one dishwasher suffice, or will you need several? Do you need a barista bar with a state-of-the-art espresso machine?

Will you use durable, restaurant hardware specifically designed for the restaurant industry that is water and grease resistant? What type of storing or shelving unit makes sense for your dry goods and cooking supplies, plate ware and utensils?

Does a security system need to be installed, or a remote monitoring solution? How many credit card or payment processing devices will you need?

Be sure to outline everything you’ll need in terms of equipment. Do a walkthrough before opening to see if there is anything you may have missed.

 

  1. Create a Marketing Plan

Social media platforms have become a driving force in the restaurant industry. They are a restaurant’s “secret weapon” in terms of marketing. A recent report in the New York Times shows that 72% of consumers use Facebook to make restaurant and food-related decisions based on comments and images shared by others.

Before your Grand Opening, create social media accounts across multiple platforms. Social media is the most effective and easiest way to market your new restaurant in the digital world we live in.

The desire for customers to connect with each other through social networks is thriving, and it’s time for restaurants to take advantage of the numerous benefits they can offer and bring to brands.

2019 Restaurant Technology Trends ReportBenefits of Utilizing Social Media in your Restaurant:

  • It’s Free! The cost of creating a Facebook, Instagram, or Twitter account for your business comes at no cost to you. Create loyal fans and enjoy positive reviews, comments and “likes” on social media platforms to grow your fan base.
  • Increase Revenue through Promotions: Many restaurants have started offering promotions or discounts via social media avenues. Reward your customers for liking and following your page or account. Again, what’s better than a free advertisement that brings in business?
  • Social Media Creates an Experience: Selling your food isn’t enough in this day in age – restaurants need to sell experiences instead. For many consumers, social media platforms are a way to share their dining experience with the online community. Each time a guest posts a photo of your delicious dishes, this allows your brand to impact the way society views your product.
  • Expand your Customer Base: The more content you post on social media, the more opportunities you create for a new customer to notice posts and photos of your food and menu specials. A greater amount of content generates a greater amount of interest, which leads to more conversions, thus NEW customers!
  • Promote Trust and Loyalty of your Brand: Consumers appreciate reviews of your brand – the good, the bad and the ugly. Allowing guests to post reviews on social media platforms promotes and suggests transparency and brand trust. With restaurant competition at an all-time high, credibility is key in creating loyal customers.
  • Decrease your Marketing and Advertising Budget: While utilizing free social media networks, the cost of boosting posts or running ads is minimal in comparison to other marketing and advertising avenues such as printed flyers, coupons, direct mailers, etc.
  • Increase your Inbound Website Traffic: Using social media to increase your website traffic is easy. Adding Call-To-Action buttons and linking your website directly to your Facebook and Instagram profiles make it even easier for guests to find your website and keep up with restaurant news.

In addition to social media, creating a website for your brand is an extremely beneficial marketing initiative. You can also promote your opening day with coupons, flyers, contests, at other local, community events like sports games, farmer’s markets, or local band performances.

Never underestimate good ole fashioned word of mouth advertising as well!

  1. Recruit and Hire your Team

A restaurant of any shape, size, or concept is nothing without stellar employees who are focused on providing the optimal level of customer service. Your service style is a major reflection of you as a restauranteur. When recruiting your wait staff, look for dynamic and outgoing personalities who are also team players and seem coachable. The last thing you want is a loose cannon on your staff who could potentially engage in conflict with a customer or fellow staff member.

Interview each candidate for all the roles you are hiring for. Get a second opinion as well. It never hurts to have a friend, family member, or business partner meet with potential candidates too.

Once you’ve checked all the above boxes, it’s time to open your restaurant’s doors, host a grand opening, and begin enjoying life as a restaurant owner!

Good luck!